This chapter will describe the profile of 4 types of sample
farms, i.e., swine, broiler, layer and dairy.

6.1 Profile of Pig Farms from the
Livestock Farms Survey

Tables 6.1-6.30 show the profile of the survey sample of pig
farms. The description of the sample profile is divided into 6 topics.

6.1.1 Farm Size and Contractual Arrangements

The sample of 174 farms are from 5 provinces, two from the
eastern region, two from the central and one from the Northeast (Table 6.1 and
Figure 5.1). All five provinces have connecting borders with each other. The
largest sample of pig farms comes from Chachoengsao which is also the largest
swine producing province in Thailand (Table 6.1). The second largest sample is
from the central province of Lopburi which is the new swine growing area. Korat
has the smallest sample size.

Most sample farms (64 percent) are of medium-scale, followed
by the large scale (24 percent). Seventy out of 112 medium-scale farms have
101-500 pigs per farm (Table 6.1). Chachoengsao has the largest number of farms
in both the large-and medium-scale categories. Most of the small farms are in
Korat, a Northeastern province. In term of average pigs per farm, therefore,
Korat farms are the smallest, averaging 268 pigs. Korat used to be a major pig
producing province in the Northeastern region. But in recent years, Korat has
suffered water shortage. The province with the highest average number of pigs is
not Chachoengsao, but Saraburi with the average of 2,736 pigs which is almost
twice as large as that in Chachoengsao.

Except Chonburi, the province with the high number of pigs per
farms tend to have high density of pig population per
rai[97]. Although Saraburi have both the
highest number of pigs and largest land area per farm, it has the highest
density of pig population (Table 6.2). This is because Saraburi's average number
of pigs per farm is almost twice as high as those in Chonburi, while the average
land holdings in both provinces are almost the same. Chachoengsao has the second
highest density of pigs per rai, followed by Lopburi which has the smallest land
holding. Korat has the smallest number of pigs per farm and also the smallest
number of pigs per rai.

Most of the farms (84 percent) are specialized farms, growing
either piglets or fattened pigs for sale (Table 6.3). The integrated farms, both
partially and fully integrated, still account for only 16 percent of the sample
farms. However, the industrial specialists claim that the number of integrated
farms is on the rise as it is difficult for the piglet farms to make profit as a
result of wide fluctuation of the piglet price. Moreover, the piglet production
is a care-intensive activity. As a result, most of the new entrants are forced
to be integrated farms. But our survey data contain too small number of new
entrants to substantiate the
argument[98].

The fattening farms have the largest number of pigs per farm,
while the piglet farms have the smallest farm size (Table 6.3). This is not
surprising since growing sows and weaning piglets are very much care-intensive
activity. Pig fattening farms can exploit the economies of scale from bulk
purchase of feeds and mechanization of the fattening process. The integrated
farm size is almost three times as large as the piglet farms but 50 percent
smaller than the fattening farms.

Out of 174 sample farms, 125 farms are the independent farms
(Table 6.3). The other 30 farms are the wage contract farms and 19 are the
price-guarantee (or forward) contract farms. There are two types of wage
contract, i.e., fixed wage per kilogram of fattened pigs and fixed wage per
piglet. Most of the contract farms are in Lopburi and Chonburi (Table
6.5).

The farmer who has a contract to fatten pig will be paid, say,
1.7 for each kilogram of live pig. He
will be supplied with a 14-kg piglet and required feeds to fatten the pigs up to
100 kg in 17 weeks. The minimum conditions are that FCR should not exceed 2.7
and the mortality rate not higher than 3 percent Piece-rate incentives are
awarded if the performance is better than the conditions. On the other hand, if
the feed used exceed the requirement, the farmer will have to bear the cost
difference. The contract will be terminated if excessive use of feed is observed
for two consecutive batch of fattened pigs.

The contract to produce piglets is a more sophisticated
contract. The farmer will be supplied with sows, sires, feeds and drugs to
produce and wean 4.5-kg piglets (about 17-18 days old). In return, he will be
paid 90 baht for each piglet plus a bonus of 1 baht for each extra gram of
piglet. Moreover, the farmer will receive 30-baht premium wage if the farrowing
rate is 75 percent. If the farrowing rate is higher than 75 percent he will
receive additional 5 baht for each percentage of the farrowing rate. The maximum
premium is 105 baht if the farrowing rate is 90 percent or higher and number of
piglets is 9 per wean. On the other hand, when farrowing meets the 75 percent
target, but each sow yield less than 9 piglets, he will not receive any premium
payment.

The third type of contract (about 19 farms) is the price -
guarantee on a credit term from the contractor at the price slightly higher than
the market prices. The contract allows him to sell the 12-kilogram piglets to
the contractor at the fixed price of 800 baht, with an additional bonus of 25
baht for each kilogram of piglets in excess of 12 kilograms.

The above description of the pattern of contracts in the swine
industry is also consistent with that in the broiler industry in which the
market is overwhelmingly dominated by the wage contract. Although farmers may
prefer the price-guarantee to the wage contract because of the absence of risks
of output price and more flexibility in their production decisions, they find it
difficult to enforce the contractor to comply with the terms of the contract
when the market price of pigs is lower than the guarantee price. Under the wage
contract, both the risks of output and input prices are eliminated. But the
farmers still assume most of the production risks. Since the production of
piglets is highly care - intensive, the contractors have to devise a
sophisticated incentive scheme to ensure that the contractees put great care in
their production. Comparing to the wage contract to produce piglets, the wage
contract for fattened pigs has relatively simple terms, i.e., a single wage rate
for each kilogram of pigs, provided that the minimum weight (say, 90 kgs) is
achieved.

Most contracts (24 out of 49 farms) are a one-year contract,
and 15 farms have the contract on a batch (or cohort) basis. Only 5 farms have a
contracting period longer than one year. That most farms have a short-term
contract should not be interpreted as a temporary contract (Table 6.6). In fact,
most contracts are usually renewed automatically unless the contracting parties
want to terminate their relation.

6.1.2 Farms' Characteristics

The majority of swine farmers (68 percent) are older than 40
years. Only 10 percent are younger than 30 years old (Table 6.7). Most owners
are male (68 percent), particularly the owners of large-scale farms. But women
owners are almost equally represented among the small farms (Table
6.8).

More than 51 percent of farmers have no education, comparing
to only 5 percent for the Thai agricultural workforce. Another 30 percent have
only primary education, comparing to 79 percent for all agricultural workers.
However, Table 6.8 shows that the owners of the larger farms tend to have higher
educational attainment.

To compensate for the low level of education, the farmers have
acquired their farming skills from accumulated work experience. About 62 percent
of the farm owners have more than eight years of experience (Table 6.9).
Moreover, 83 farmers (48 percent) have attended some training programs in swine
production. Some farmers have also hire the services of outside swine advisors
(most of whom are university professors) veterinarians (9 percent of farmers),
feed and drug companies (31 percent) and the contractors (20 percent).

6.1.3 Employment and Capital Investment

All, but the large-scale farms, employ more family workers
than hired labor, indicating that most of the swine farms are still dominated by
the family enterprise business. Even in term of full-time equivalent workers,
the number of family workers in the small and medium-low scale farms is still
higher than hired employees (see Table 6.10).

All of the workers hired by the small farms have only primary
education. Larger farms employ workers with higher education. One lower medium
scale farm hires an animal husbandry worker and three other medium-scale farms
hire a few workers with secondary education. Farms larger than 500 pigs begin to
hire accountants because they need to use the financial statements to properly
control their high volume of daily cash flow. But on the average, the average
number of hired employers is still small, ranging from less than 2 workers for
the small farms to less than 7 workers for the largest farms (Table
6.10).

Most of the sample farms are professional modern farms with
permanent concrete houses. Twenty eight farms (or 16 percent) have the houses
equipped with evaporation system to control the temperature within the house
(Table 6.11). As a result, fixed investment (excluding land) is quite high. The
average investment is 1.87 million baht[99] (or
US$ 44,457) ranging from less than 1-2 million baht for the medium-scale and to
4.4 million for the large scale farms. The largest investment is as high as 20
million (Table 6.12). Therefore, the labor-intensity is quite low, with an
average labor-capital ratio of 0.48 worker per one hundred thousand baht of
investment.

6.1.4 Sources of Inputs

Table 6.13 shows that total feed costs account for 86 percent
of total variable costs, with mixed feed representing 65 percent. The cost of
piglets is only 3.2 percent because only 74 farms buy piglets from the market.
The other 100 farms have their own breeders, and hence there is no explicit cash
cost of piglets. The implicit costs of piglets is the cost of maintaining the
pig breeders and weaning.

Drug cost is the third largest item, representing 4.5 percent
of total cost, while the cost of hired labor and interest cost each account for
about 2 percent. The smallest cost item is tax, accounting for only 0.2 percent
(Table 6.13). However, the figure does not include the value added tax borne by
the farmers when they buy non-agricultural inputs. And yet this indicates that
the Thai pig farmers pay small amount tax relative to the fixed salary employees
who pay 5 percent-37 percent of tax on their taxable income.

The survey shows that farmers do not have serious problems in
buying inputs. In all provinces, sixty percent of the farms reported that there
is at least one animal feed store in the locality (Table 6.14). Except those who
obtained feeds from their contractors, 47 percent of farmers bought animal feeds
from more than one stores, (Table 6.14). The local animal feed stores were the
major suppliers of raw materials for feeds, supplying 80 percent of the farms.
On the other hand the market for ready mixed feeds was shared by three groups of
suppliers, i.e., the contractors (who supplied 41 percent of all farms), the
local animal feed stores (supplying 30 percent of all farms), and the
large-scale feeds companies which used the direct sale method (accounting for 28
percent, see Table 6.15).

Only 38 percent of the farmers reported that there are some
problems with the feeds bought (Table 6.16). The most frequent problem reported
by 45 percent of the farmers was that the feeds were infected with bacteria,
followed by the high price problem (36 percent). Among those 54 farms that
changed the feeds formula last year, the most important reasons for change were
feed quality (25 farms), and high feed prices (21 farms- see Table
6.16).

There are also a number of competing suppliers of piglets,
sows and sires as well as semen for artificial insemination in the locality that
the farmers can buy from. About 55 percent of farmers buy piglets, sows and
sires from at least two suppliers (see Table 6.17).

Among 116 farmers who grow breeders, 70 farmers produced their
own artificial insemination for use on their farms; 22 buy semen from the
contractors and 21 from the breeder farms.

In conclusion, the markets for all inputs used in the swine
production are active. There are effective choices of suppliers from which
farmers can buy.

6.1.5 Efficiency of Feed Utilization

After dropping the extreme values of reported feed conversion
ratio (FCR), the average FCR is 2.43 which is slightly better than the norm
(2.7) used by the swine experts. The smaller farms tend to have better feed
efficiency as their FCRs are between 2.17 - 2.18, while the FCRs of the larger
firms are 2.54 - 2.62 (see Table 6.18).

The FCRs estimated from the actual amount of feed used and
weights of pigs sold show that the average FCR is better (lower) than the FCR
reported by the farmers (Table 6.18).

6.1.6 Diseases and Drug Use

Detailed investigation of drug usage shows some evidence of
over-use of anti-biotic drugs among the pig farms. First, more than 81 percent
of farm use anti-biotic drugs (Table 6.19) which may have residue left in the
pig carcass. Almost 85 percent of farms have to use ailment laxative. It is also
worrying that at least 52 farms admit that they use Beta Agonist to produce the
red meat carcass which are highly demanded by the consumers. The Beta Agonist,
if excessively used, could be a cause cancer in human. Most farmers (31 out of
52) believe that the use of Beta Agonist helps increasing the net farm gate
price since the consumers prefer to buy red-colored pork. Thirty one farmers
reported that when the use of Beta Agonist was banned, the price of pigs
dropped.

Secondly, although most farmers (62 percent) reported that the
trend of drug uses was constant in the last 3 years, 25 percent admitted that
they are using more drugs for their animals.

In the last three years, about 4-15 percent of pig farms
reported some incidence of communicable diseases on their farms (Table 6.20).
Foot and Mouth disease has the highest incidence, followed by Aujesky and
Micoplasm. The most popular curing method is the use of vaccination (reported by
37 percent of the farms). The second most popular method is the use of
anti-biotic drugs only 17 farms employed the veterinarian to help solve the
problems and 10 farms seek help from the Department of Livestock
Development.

Among 113 fattened farms, 67 farms have the mortality rate
less than 5 percent. But the mortality rate has the mode of 10 percent. Table
6.21 shows that 16 out of 22 farms that have 10-percent mortality rate have more
than 500 pigs. This is can be explained by the fact that they tend to hire
inexperienced unskilled labor as the turn over rate is very high. One farm has
the labor turnover rate of 10 percent in 2002.

Although disease and illness are major factor accountable for
the death of the animals (as reported by 53 percent of the farmers, they are
only one of many factors that affect the mortality rates of on-farm animals. The
other important cause is that the pigs bite each other (reported by 10 percent
of farmers), (see Table 6.22), meaning that the density of pigs is too high.
When the Department of Livestock Development learns about epidemic, most farmers
(97 percent) reported that the officials did not take any action which included
asking the farmers to file report or to send the sample. Only 10 percent of
farmers experienced the official visits when they had epidemic
problem.

6.1.7 Markets for Fattened Pigs and Piglets

Fourty six contract farmers do not have marketing problems
because the activity is responsible by the contractors. The competition among
the contractors is outside the scope of our survey. But it should be noted that
the survey found that the contract farms are concentrated in 2 provinces, i.e.
Chonburi and Lopburi. In each province, there are at least 3 contractors
offering the contractual choices for the farmers. The largest contractor is CP
which is the largest agri business company in Thailand. CP and its subsidiaries
engage in all stages of livestock business.

There are 3 major channels the farmers sell their products,
i.e., the contractors, the middlemen, and the other farmers (Table 6.23).
Although the middlemen are the most important channel of marketing as reported
by 112 farmers, only 63 farmers report that they are their main buyer (Table
6.23). The second largest buyers' are the local market and fattening swine farms
upon which 19 percent of the farmer rely (Table 6.23). Moreover, about 48
farmers also report that in addition to the main buyer, they also have an extra
buyer. The local market is the most important extra market for those farmers (58
percent of 48 farmers).

The major problems facing the farmers who sell their swine are
the low prices, followed by the pressure to use Beta Agonist (Table
6.24).

When there are dead pigs or dead piglets, 70 percent of the
farmers are able to sell some or all of them (Table 6.25). If they do not sell
the dead animals, most farmers (37 out of 87 farmers) will bury or burn them,
while 18 farmers will use them as feeds for on their fish farms, and 13 farmers
send the dead animals back to the suppliers.

6.1.8 Price & Gross Margins

The gross margin, measured by the difference between the
prices of pigs and the prices of feeds, is 256 percent for fattened pigs and
386.5 percent for piglets. The small-scale and the large-scale farms tend to
have higher gross margins than the middle-scale farms (see Table
6.26).

Surprisingly, the price-guarantee contract farms have higher
gross margins than the independent farms. The higher margins are attributed both
to the higher prices of pigs and piglets and lower feed prices enjoyed by the
contract farms (see Table 6.26).

6.1.9 Environmental Management

The majority of pig farms still have access to low cost water
for farm uses. Almost 53 percent of farms use water from their own artesian
wells; 25 percent use water from the public waterways and 15 percent use rain
water. Only 6 percent use the more expensive pipe water or treated water (Table
6.27).

Surprisingly, less than 17 percent of farms discharge the
waste water directly onto the public waterways or neighboring lands. Almost 41
percent of farmers have water treatment ponds and bio-gas digester. However, the
majority of farms (92 farms) discharge waste water into the simple holding ponds
before discharging it into the public waterway. Such practice can result in the
deterioration of quality of underground water in the long run. Moreover, the use
of underground water has also contributed significantly to the
landslide.

Most of the farms (75 percent) get rid of the pig manure by
selling them (both in dry and wet manure) or giving them to their workers and
neighbor (Table 6.27). Only six percent of the farms use the manure for their
bio-gas digester and 4 percent use manure as fish feeds. However, there are
still 12 farms (7 percent) admitting that they discharge the manure directly
only the public waterways and another 24 farms discharging the wet manure into
their bio gas ponds.

Almost all of the farms (95 percent), regardless of their farm
size, has received complaints about the smell from their farms. The main methods
to reduce to smell are to frequently get rid of manure (61.5 percent), to wash
their pens more frequently, (42.5 percent) and to use disinfectant (27 percent)
(see Table 6.27). About 50-55 percent of the farmers report that they clean
their gestation pens and weanling pens every day, and the other one third clean
the pens weekly. The fattening pens are not cleaned as often as the gestation
and weanling pens (see Table 6.27).

With regards to the flies problems, most farmers (66 percent)
do nothing to tackle the problem. Almost 19 percent of farmers frequently get
rid of manure and 15 percent use flies disinfectant, micro-organism and other
simple methods.

Only 53 farms report that they invest in water treatment ponds
and another 20 farms invest in bio-gas digester ponds (Table 6.28). The average
investment is 817,600 baht for water treatment ponds and 112,000 baht for the
bio-gas digester. All of those farms have received government subsidies for
their investment. The subsidies are 67 percent of the investment in water
treatment ponds and 37 percent of investment in the bio-gas ponds. The
Department of Livestock is the major government agency providing the subsidy for
water treatment, while there are three government agencies providing the subsidy
for bio-gas investment, namely the Department of Agricultural Extension, the
Department of Agriculture and the National Energy Policy Office. (See Table
6.29).

In addition to the density of pigs per pen as shown by the
problem of pigs biting each other, many farms have to use some kinds of
transportation means to move the cullings from gestation houses to the
weanling houses and to move piglets from the weanling houses to the fattening
houses (Table 6.30). This is because those houses are separated in a distance.
But most farmers (50 percent) hand-carry the piglets to the fattening pens and
39 percent hand-carry the cullings to the weanling pens. Only 7 percent
of farms do not have to transfer the piglets. Although a large number of
cullings and piglets are transferred by transportation modes, the farmers
have incentive to take good care of them to avoid unnecessarily high death
rates.

[97] About 6.25 rais are
equaled to one hectare.[98] Among 11 farms which are
less than 2 years old, 6 farms buy piglets to grow as fattened swine, two are
breeding farms, and two are partially integrated farms.[99] About 42.3 baht is one
US dollar.